Vattenfall to Build $1.6 Billion Wind Farm With Siemens Gear

Aug 11, 2014 11:53 am ET

(Updates with Siemens comment in sixth paragraph.)

Aug. 11 (Bloomberg) -- Vattenfall AB is about to build a 11 billion-kronor ($1.6 billion) wind farm in the German North Sea to beat Chancellor Angela Merkel’s planned changes to subsidies.

Vattenfall and municipal utility Stadtwerke Muenchen GmbH will start construction next year on the 288-megawatt Sandbank project, it said today. The plant will use 72 of Siemens AG’s 4- megawatt turbines and qualify for renewable subsidies before power auctions start two years later, Chief Executive Officer Oeystein Loeseth said.

“Right now, there is good profitability for those who have the possibility to build,” Loeseth said in a phone interview. “From 2017 the system will be partly redesigned with auctions in the areas where wind power is to be built, which will increase competition and lower profitability.”

Merkel has said the switch to renewable energy from nuclear and conventional sources, or Energiewende, is her most important project. Her government, which targets 6.5 gigawatts of offshore wind capacity by 2020, this year agreed to slow planned cuts for new offshore wind farms in 2018 and 2019 and will permit more sea-based turbines.

Sandbank will be built about 90 kilometers (56 miles) west of the island of Sylt in water depths from 25 meters (82 feet) to 37 meters, Siemens said in a separate statement. Europe’s biggest engineering company will also service the plant, it said.

Worker Ships

The distance from shore means the service operations will be run from a ship with accommodations to prevent the need for regular long trips back to land, Michael Hannibal, the head of Siemens’s offshore wind unit, said in a telephone interview.

“This project fits into the strategy of innovation and industrialization of offshore wind,” he said, adding that the turbines usually account for less than half of a wind farm’s total budget. “The whole service concept is built around having a vessel out there and then using helicopters.”

Vattenfall owns 51 percent and will invest 5.6 billion kronor in Sandbank, with Stadtwerke Muenchen owning and providing the remainder. Both utilities already cooperated in the 288-megawatt DanTysk wind farm that’s nearby.